Enterprise Minnesota Magazine - Spring 2022 by Enterprise Minnesota

From tiny Karlstad, Mattracks manufactures rubber track SMALL TOWN, WORLDWIDE conversions for customers in more than 100 countries.

Helping Manufacturing Enterprises Grow Profitably SPRING 2022

Cyber Insecurities Manufacturers ignore growing cyberattacks at their own peril.

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SPRING 2022

CYBER INSECURITIES

Enterprise Minnesota’s Bob Kill hosts a panel of three experts who all agree small and medium manufacturers ignore growing cyberattacks at their own peril.

Small Town, Worldwide

Can You Hear Me Now?

From a plant in tiny Karlstad, Mattracks manufactures rubber track conversions for customers in more than 100 countries.

Assistive listening manufacturer Williams AV took the temporary market slowdown to re-evaluate its internal processes and look for opportunities to improve quality, gain efficiencies, and reduce costs.

Peer to Peer Learning

The Value of Engaged Employees

Enterprise Minnesota’s peer councils enable manufacturing executives to get advice from people who know best: each other.

How a culture of lean and continuous improvement helps companies improve productivity and increase quality.

2 Wait. What? As manufacturers contend with business impacts of COVID, they may not see cybercriminals sneaking in their back doors.

Plastics Powerhouse

Getting Ready

Win-Win Opportunities

Multi-faceted Pride Solutions uses plastics technology to manufacture goods for a wide variety of customers.

R&D Batteries prepares for post-COVID growth by getting its ISO 13485 designation.

Manufacturers might be wise to consider adding hard-working Afghan evacuees to their workforces.

CORRECTION: In the Winter 2021 issue we inadvertently identified Wanner Engineering as connected to Enterprise Minnesota peer councils. They are not a member at this time. The Mercury Mosaics story mentioned Enterprise Minnesota’s role in a strategic plan for their company that has not taken place. Our apology for these inaccuracies. SPRING 2022 ENTERPRISE MINNESOTA /

Helping Manufacturing Enterprises Grow Profitably

Wait. What?

9001:2015

As manufacturers contend with business impacts of COVID, they may not see cybercriminals sneaking in their back doors.

o one can blame manufacturers’ preoccupation with unrelenting COVID economy challenges: workforce shortages, higher pricing, clogged supply chains, capacity-straining customer demand, or worse, inability to regain pre-pandemic market share. I don’t want to pile on, but manufacturers must add cybercriminals to their worry list. For our cover story “Cyber Insecurities” (page 30), I sat down with three experts: Kevin Pomeroy at USI Insurance Services, Shalin Johnson at Marsh & McLennan Agency, and Jeff Olejnik at Wipfli. Let me tease out some of the lessons I took away from this fascinating conversation. It starts with a whopper: Cyber thieves are on track to rake in $10.5 trillion a year by 2025. These are sophisticated terrorist enterprises. But they are also Tony Sopranos who today can set up a successful cybercrime syndicate using tools available on the internet. To make Big Money in this criminal field today, you can execute a sophisticated Fortune 500 heist, or go after 10 smaller companies — with far less sophisticated defenses — and set your ransom for each at a 10th of what you’d ask Target or Medtronic. I know which path I’d take! So, who are the next pigeons on the cyber mafia’s list? Compelled by regulators, these industries have already built (or are building) robust cyber defenses. How about small- and mediumsized manufacturers who a) doggedly deny the threat and dismiss opportunities to invest in cyber defenses, and b) simply cannot afford to shut down a plant’s production and thus will have little choice but to pay up to these criminals? You tell me. 2

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Cyber insurance is a nobrainer. Every manufacturer reading this should accept the fact that insurance premiums are rising along with increased risk. You’ll read in our discussion how insurers have paid out $1.75 for every $1 they’ve received in premiums over the past year or so. It is an unfortunate cost of doing business for all. Everyone should also act. IT professionals will start by equipping your systems with defenses like multi-factor authentication. But the most significant action will begin with the understanding that your principal vulnerability lies within your people, not your equipment. Our panelists all agree that companies need to identify companywide awareness of their vulnerabilities, starting with the highest levels of management. Employee training must be more rigorous than merely adding it to check-the-box components of new employee onboarding or circulating a yearly all-staff memo. Everyone must recognize that any step that makes it easier for employees, vendors, or customers to access their system also opens that same door for cyber thieves. Every personal laptop or smartphone that accesses their system may invite unwanted visitors. I am persuaded that without planful preventative actions, cybercrime will become the biggest threat facing manufacturers within the next half-decade. We’ve noted how cyber-talk in recent focus groups mirrors the way some manufacturers started to squirm at the first long-term prospects of worker shortages. It can’t happen to us, right? Wrong. Rest assured that this is not hyperbole. Consider it, ironically, a data-driven call to action. Bob Kill is president and CEO of Enterprise Minnesota.

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CONTINUOUS IMPROVEMENT

Plastics Powerhouse Multi-faceted Pride Solutions uses plastics technology to manufacture goods for a wide variety of customers. Jack Daggett, president of Pride Solutions

atch any major snowmobiling or snocross competition and you will likely find that the racers’ sleds are sporting C&A Pro skis. The equipment is highly regarded by pros and amateurs alike, known for its speed and sturdiness paired with an ability to turn and jump to the extreme. C&A’s legions of fans around the world probably don’t realize that their gear comes from Minnesota. The shop’s robust offerings of skis are made by Pride Solutions, a Hutchinson manufacturer that has operated C&A Pro for decades. C&A is one of Pride’s four divisions that serve a wide variety of sectors — from agriculture and recreation to mining and the military — with durable compression-molded plastics, fabrication, and assembly.

Pride is one of just a few companies in North America that work with ultra-high molecular weight polyethylene (UHMWPE), says company president Jack Daggett. The material is known for its toughness and resilience in abrasive environments and performs especially well in very cold and hot temperatures. A prime example: Public works clients use Pride’s protective plastics on snowplows to prevent equipment damage and protect road surfaces. Pride’s origins stem from its May Wes manufacturing division. For 50 years, it has specialized in making UHMW-PE aftermarket equipment for agricultural customers. The founders of May Wes used plastic components — instead of metal — to shield wear areas like a combine’s corn header.

“They came up with plastic skid shoes that wear really well. When dragged on the ground, it doesn’t disintegrate or rust, and it’s lighter,” Daggett says. “Plastic ups the ante on what farm equipment is capable of doing.” Daggett’s family purchased the company out of bankruptcy in 2002 and set up shop as Pride Solutions. Its other divisions include Pride Engineered Plastics, a B-to-B contract manufacturer focused on compression molding and fabrication, and Pride Assembly, a custom assembler specializing in electro-mechanical and mechanical work. Daggett grew up working at the company as a kid, igniting his interest in manufacturing and inspiring him to join the family business. He did so in 2013 as the operations manager, becoming president in 2016.

SPRING 2022 ENTERPRISE MINNESOTA /

Comprehensive growth

With 35 employees, Pride currently operates in a 20,000-square-foot manufacturing facility. This year, it will complete an expansion to extend its manufacturing space to 40,000 square feet. The company needs more space thanks to its recent track record of growth, Daggett says, including growing revenue 40% from 2020 to 2021. Growth should slow a bit in 2022 but still will land around 10%. The company’s retail components (May Wes and C&A) have historically been Pride’s growth engines. More recently, all four of the divisions have been flourishing. Keys to that success are moves Daggett made when he took the helm. He invested energy into growing the company’s assembly and contract manufacturing capabilities. For example, Pride Assembly expanded its services into electro-mechanical assembly. That opened the door for the division to create electronic devices that are used on U.S. Navy destroyers and for power generation. In addition, Pride regularly deploys tech-

niques or capabilities it refines in one division to attract business for other divisions. There is deep collaboration and overlap between the four divisions, Daggett says, and that helps the company serve customers well. They benefit from Pride’s deep expertise in fabrication, molding, manufacturing, and assembly. This skillset allows the company to offer diverse services, such as CNC routing and lathe work, plastic forming, and supply chain management. Along with the general boost in manufacturing lately, Pride’s consumer-focused recreation and agriculture products especially benefitted from pandemic conditions.

Higher commodity prices gave farmers funds to invest in equipment like May Wes’ stalk stompers and skid shoes that protect metal surfaces during harvest, Daggett says. And as consumers flocked to outdoor recreation, they sought C&A’s accessories that improve their snowmobiling on trail, mountain, backcountry, or crossover environments.

Promising future

To prompt growth at Pride, Daggett turned to the Entrepreneurial Operating System (EOS). He and his leadership team have used its principles to align employees

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behind the company’s mission, core values, and culture. The EOS Traction model also motivated the team to implement systems for hiring, job placement, reviews, and retention of employees. Daggett points to Pride’s employees as a key to its success, with their “get it done attitude” and longevity at the company. Pride leaders made other moves that fostered growth. The company shifted its marketing to more digital and social media outlets and found ways to lower costs by buying higher volumes of materials. Plus, Daggett thoroughly enjoys finding more efficient ways to operate and make im-

provements in processes or products that benefit customers and the bottom line. “Our growth has energized me. It’s cool reaping the benefits of the work you put in — seeing something you put in place two years ago pay off. I enjoy working with the employees we have here, I enjoy the products we manufacture, and I just like manufacturing. Making a quality product that meets customers’ needs with a process that’s efficient and profitable, that’s fun for me.” Pride turned to Enterprise Minnesota to help configure its new manufacturing space, ensuring that the equipment is placed in a way that promotes flow. This will help the company maintain its high levels of efficiency and ability to serve customers. Pride works to keep customers happy with the breadth of its capabilities and execution, completing work of the highest quality at competitive prices. “Typically, if we get a new customer, they are repeat customers,” Daggett says. “It’s not a flash in the pan. We are valued suppliers and continue to supply those customers year over year.” —Suzy Frisch

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Employees Manny Efiong (left) and Matt Braund (right) bought All-American Engineering & Manufacturing in 2017.

ISO

An Important Pivot After losing their quality manager, two company owners learn their own value in passing an ISO audit.

ast August, Manny Efiong, owner and president of All-American Engineering & Manufacturing in White Bear Lake, was on vacation with his family in Texas. Three months earlier, the company’s quality manager had left AAEM, and while Efiong was away, he learned an ISO audit had been scheduled for that October. Since May, the leadership team at AAEM had been looking for a new quality manager with ISO experience, but they hadn’t been able to fill the position. With the audit fast approaching, Efiong and his partner and vice president Matt Braund decided it was time for a new approach. “We had to pivot to something else. We had to look for ways to solve the problem we had in front of us,” he says, explaining that’s what drove him to pursue Enterprise Minnesota’s ISO audit preparation services. The pending audit was one of the first major challenges the relatively new owners faced. In 2017, Efiong and

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Braund purchased AAEM, which offers contract machining and manufacturing and has a proprietary line of industrial hinges marketed under the Daro Hinge brand name. They both had long tenures as employees of AAEM; Efiong joined the company as a machine operator in 1995, and Braund was hired in 2002 as the milling machinist lead.

A vision for the future

Efiong and Braund bought the company because they believed they could run it more efficiently and increase growth, without disrupting its base of loyal, longtime customers. In fact, since buying the company, revenue has grown by 48%. The pair has led the company through several years of severe worker shortages by creating a family-like atmosphere while ensuring employee compensation is competitive. After buying the company, for example, they established a 401(k) plan that allows employees to

put in 6% of their income, with AAEM matching 3.5% of the employee’s total compensation. Braund says they also closely monitor industry trends to make sure their employees are paid competitive wages for the specific skills they have and the jobs they do. The result, says Efiong, is that many of AAEM’s 23 employees have worked at the company for more than 15 years. The experienced workforce at AAEM helps the company deliver fast, reliable and customized products to their broad range of industry buyers. They do contract manufacturing for the Department of Defense and supply parts for electrical switches. The Daro Hinge line is used in applications such as prison gates, bank vaults, military applications, industrial OEM equipment, sound attenuation, and radiation shielding.

Addressing a potential crisis

Because of the type of customers AAEM serves, ISO certification is crucial. With the audit scheduled for October, speedy action was essential. “While I was still in Texas, we set up a meeting with Enterprise Minnesota for when I got back,” Efiong says. “That was in the first week of September. We had a month and a half to go before the audit.” Enterprise Minnesota’s Keith Gadacz, a business growth consultant, and Bob Arvold,

a business development consultant, worked with AAEM’s leadership beginning with that first meeting. “We started with a oneday assessment,” says Gadacz. “Basically, we needed to get a lay of the land and understand gaps.” Gadacz used the assessment to develop a strategic plan to address the audit. “That was a detailed plan for corrective steps,” he says. “Over the next three weeks, we implemented that plan to fix the immediate non-conformities.” Efiong says the company’s leadership and the Enterprise Minnesota consultants worked well together. As an example, Efiong notes one of the steps was to rewrite procedures to fall in line with the requirements of the ISO 9001:2015 standard and to reflect the company’s operations. “We started working together, and things just started falling in place for us,” Efiong says. After a month, concerns about the audit started to fade. “With Enterprise Minnesota’s help, we realized we were in a much better position to tackle it.”

“We realize that this is something that comes from the top. You have to take that ownership and be able to manage it from the top all the way down through the whole organization.” Moving forward

For the next step, Gadacz took 60 days to help the company develop a long-term plan that would ensure consistent compliance. Efiong says during the process, he and Braund realized how important their own roles were in this context. “What we went through with Enterprise Minnesota taught us a number of things about how the whole ISO process works, and how we should run it,” he says. “It used to be something that Matt and I thought we had to push over to the quality manager to run — that we needed to do sales or marketing or strategy and all of that.” Now, Efiong says their thinking has

shifted. “We realize that this is something that comes from the top. You have to take that ownership and be able to manage it from the top all the way down through the whole organization,” he says. Gadacz has high hopes for AAEM’s future. “The system is corrected, the audits have been passed, and now we are entering the next 90 days of sustainment,” he says. “We want to see continued improvement of flow and operations and in-cell improvements. AAEM can use this success to determine which new customers they can approach — that’s next in the sequential process looking forward.” —Kate Peterson

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Owner Tom Teske (right) and his son Matt Teske (left) are investing in automation.

LEAN MINDSET

Growth Through Adversity Teske Manufacturing expands despite a litany of challenges.

wner Tom Teske says Teske Manufacturing has managed to expand its operations, despite absorbing serious punches from everything the so-called COVID economy can throw at it, including workforce issues, supply chain disruptions, and rising material costs. Teske acquired the trailer manufacturer from bankruptcy in 2002. Since then, Tom and his team have done “whatever it takes” to strengthen the business. They’ve invested in the plant and equipment and concentrated on building customer relationships. Teske has also branched into subsidiary companies: Complete Target Systems, a shooting target manufacturer, and Teske Metalcraft, a fabrication company. Today, the family-owned company employs about 30 workers in Springfield, Minn., where they manufacture utility and landscape trailers that “follow you anywhere.” For nearly a decade, Tom’s son Matt has been a full-time team member and

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is currently vice president of sales and new business development. Tom’s wife Karen also has ownership in the business. Tom built his success by immediately integrating a culture of best practices into the company’s processes that enabled them to do more with fewer steps. Instead of learning through trial and error, the company elicited help from experienced consultants at Enterprise Minnesota. The lean mindset and a value stream mapping exercise were gamechangers. “These changes seem almost obvious after the fact, but it’s amazing the returns you can get from taking the time to think through the simple things and actually making those changes,” Matt says.

Toward ISO certification

Teske’s current priority is to earn its ISO 9001:2015 certification. Despite the COVID-era disruptions and challenges, Tom expects to achieve certi-

fication by mid-2022. This new credential will help Teske make full use of its equipment through contract work with an expanding list of external manufacturers. One example is a laser cutter that can run overnight with minimal oversight, an opportunity being assisted by Enterprise Minnesota consultants. “They have the asset, and they’re not keeping it busy enough,” they say.

Taking advantage of automation

Ahlquist is also helping Teske audit its management practices and implement a quality management system. The ISO practices will help Teske better deploy the use of its robotics. Tom is betting that his heavy investment in automation will allow the company to adapt to a smaller workforce and focus more on better using employees’ time. The occasional growing pains of incorporating robots into the manufacturing flow

appear to be paying off. According to Tom, the robots strengthen Teske’s adaptability, enabling the company to accommodate a wider range of products and branch out into other niches. They also insulate Teske against future workforce fluctuations. With five robotic welders and two robotic painters on the floor, Teske has improved consistency and output, Matt says. Now, a single employee can use a robot to weld an entire trailer, where the previous process required four employees. “All the robots have names, and we speak about them as if they were people,” Tom says. And they don’t erase the human component, either. Workers still need to load and unload the machines — and it opens opportunities for the employees to gain new skills, too. “The employees are warming up to the machines as we find new ways to use them,” Tom says. “The robots accept the more mundane work without objection, and the guys are happy to oblige them. It gives us a broader scope of what people can do. Before three years ago, there wasn’t much opportunity here to learn to become a robot programmer.” Enterprise Minnesota president and CEO Bob Kill calls automation a workforce multiplier. “It can make better use of the existing workforce, but it also allows the opportunity to bring in lessskilled labor,” he says. This investment in Teske’s existing workforce underscores its pride in being a family business, exemplified in both the father-son partnership and in creating jobs for the wider Springfield community. Matt had worked summers at the company before joining full time, and after working in retail sales, he realized he enjoyed both Teske’s team and the manufacturing opportunities it presented. “I knew we had something good going here,” he says. “People really enjoy the product.” And while the Teskes plan to expand their customer base, their first priority, they say, is always maintaining high quality service to their existing customers. “There’s no real magic to it,” Tom says. “We don’t cut corners, we don’t use the cheapest components, and we make products that provide value to the customer. And we’re proud to be in a small town in Minnesota and doing our part for our rural community.” —Anne Kopas

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Christopher Noddings, vice president of operations at R&D Batteries

POWERING UP

Getting Ready R&D Batteries prepares for post-COVID growth by getting its ISO 13485 designation.

hristopher Noddings, vice president of operations at R&D Batteries, decided in early 2021 that he’d prepare his company for post-COVID growth by pushing through the daily frustrations of the current marketplace and achieving its ISO 13485 designation. R&D manufactures replacement batteries and lamps for the health care industry from its 15,000-square-foot plant in Burnsville. The company was founded in 1989 by

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president and CEO Randall Noddings — Christopher’s father — who was intrigued by the high-end batteries’ business model: Their limited shelf life would mean that replacements would always be in demand. Company lore, according to Christopher, has it that Randall started the company “with nothing but a Mickey Mouse phone, a card table, and no customers.” (A photo of the phone still receives a prominent placement on the R&D website.) A classic

entrepreneurial startup, Randall and a couple of employees engineered R&D’s first products from an 1,100-square-foot office, where he also took on purchasing, payroll, customer service and shipping. He instructed his first salesman to come back in three months after he had developed a market. Randall’s plan worked. R&D grew exponentially in its first five years. And with his three sons, Christopher, Jim, and Travis, he built the company into an $18 million operation that today employs 35 people. As Randall nears retirement, heir apparent Christopher is already tweaking the operation for future growth. He’s executing plans to expand the company’s product lines into cables and sensors that would plug into the same equipment powered by its batteries. “I think our name will be enough to get us into those markets pretty easily,” he says. “Our collective management team has 150 years of experience.” That expansion, Christopher understood, would mean that new, bigger customers would require R&D to get its ISO 13485 designation, which it did in December 2021, with the guidance of Enterprise Minnesota Business Growth Consultant Keith Gadacz. Christopher says he and three of his company managers invested more than 4,000 hours over 11 months to complete the application, which he thinks was time well spent. “We’d been talking about it for a number of years before we actually pulled the trigger,” knowing that it would require a significant investment in time and money. “The audit went as smoothly as can be. We finished early by almost an entire day,” he says. He already appreciates the managerial discipline ISO instills into a company. Employee buy-in proved to be “relatively easy. It was just different. We had to teach them that you have to have a paper trail of everything with ISO. That was maybe the only challenge. There is value putting down a procedure or a system and then proving it out over and over and over again.” Christopher’s decision to move forward for future growth was not accomplished without fighting the constraints of the current COVID economy. R&D was already having to respond to fluctuations in market demand based on hospital priorities. Products related to elective surgeries faded badly, while the need for ventilator pump batteries “went through the roof,” he says. The company made no layoffs while jockeying with this market

demand; in fact, the changing heavy demand meant the company had to hire more people. Shipping and transportation confronted R&D with another significant challenge, both in terms of price and timing. Christopher says in past years the company could expect to pay $2,000 for containers from China, Vietnam or Malaysia. Today they cost more like $28,000 and require long and unpredictable lead times. Pre-COVID, Christopher says a container would arrive within eight to 12 weeks after posting a purchase order. “Now we’re pushing about 38 to 45 weeks,” he says. “I had to forecast almost an entire year in advance.” “You can forecast the usage based

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Christopher says a container would arrive within eight to 12 weeks after posting a purchase order. “Now we’re pushing about 38 to 45 weeks.” on history, but you cannot forecast the industry closing down because of COVID,” he adds, noting that all 14 containers he currently has on order are late, six were due before October 2021. A possible silver lining, according to Christopher, is that R&D had the prescience to make the order, while others didn’t. In fact, other manufacturers are currently buying from R&D because they didn’t have the foresight to forecast. Despite the challenges, Christopher remains dedicated to keeping his eye on future improvements. “We’ve been hit by this pandemic, like anyone else, but that doesn’t take my attention off my goals.” While he can now check ISO off his list, he is currently redoubling efforts to launch a more robust and customerfriendly e-commerce presence. And he’s already contemplating a five-year objective to expand R&D’s physical plant to 45,000 square feet. But he also couches his plans with a certain pragmatism. “Maybe right now we’re just motivated to riding this out,” he says. SPRING 2022 ENTERPRISE MINNESOTA /

Success Coach Jean Spaulding is partnering with five inaugural companies.

EMPLOYER RESOURCE NETWORK

A Personalized Approach to Retaining Workers Southwest Initiative Foundation’s new program helps manufacturers focus on employees’ personal needs.

ith the help of the Southwest Initiative Foundation (SWIF), manufacturers in southwest Minnesota are taking a fresh look at the way they train, retain, and support their employees. While these manufacturers continue to contend with inflation, supply chain issues, and worker shortages — such as an unemployment rate between 3 and 4% —

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SWIF saw its region’s employers struggling and looked outward to find solutions. The result of this digging is the state’s first-ever Employer Resource Network (ERN). SWIF has partnered with ERN USA, an organization that combines business development with employee support services and which now spans 11 states. Described by its founders as data-

driven and results-oriented, the program seeks to improve employee retention and productivity by supporting workers and their families directly, in both their professional and personal lives. Manufacturers with high turnover are increasingly looking inward, trying to build “sticky” company cultures that are attractive to their workers. ERN turns this idea on its head. Instead of offering incentives to encourage employees to continue working, ERN removes the “pull” factors that might force an employee to leave — whether that be a lack of childcare, reliable transportation, or personal conflict at home. “It is really an investment,” says Diana Anderson, president and CEO of SWIF. “It’s a benefit to the employees. It provides them with resources and an on-site person to help them navigate challenges that oftentimes have nothing to do with work.” To take advantage of the program, companies buy shares in the ERN. Based on their size and their employees’ needs, employers can then “buy the time” of an onsite Success Coach, who serves as a counselor, advocate, and veritable life coach for all employees. Though the Minnesota model remains in the early stages, employers around the country with longer experiences with ERN have seen dramatic results. Based on turnover rates, increased productivity, and the cost of training new workers, companies working with an ERN — the first of which was founded in 2007 — have averaged a 500% return on their investment. From health care to gaming and rubber to truck equipment, participating employers — both big and small — represent a diverse cross-section of Minnesotan industry. To start, SWIF’s ERN will serve five clients: Bethesda, Minnesota Rubber & Plastics, Towmaster Trailers & Truck Equipment, Jackpot Junction Casino & Hotel, and Jonti-Craft. Though expansion is the ultimate goal, for now, SWIF will stick to these initial five employers. Once the operation is reviewed, refined, and scaled up, SWIF hopes to expand its reach into even more areas of southwest Minnesota. Operating as the person on the ground for Minnesota’s first network is Jean Spaulding, who will be the Success Coach for SWIF’s five inaugural companies. No more than a text away, Jean is someone to “bounce ideas

off” and connect employees with the resources available to them. Whether looking to improve one’s soft skills or work on one’s financial literacy, a Success Coach can support workers and prevent any problems from growing bigger, like financial insecurity or lack of elder care. “We really try to interact with the employees early,” says Jean. “That way we can start to get to the root of what’s causing [any work-related] issues.” Early reports from the program are encouraging. A few clients have even begun advertising their ERN participation as a recruitment tool. According to Jean, some have seen employees mention ERN to friends and relatives based on positive experiences;

“It is really an investment,” says Diana Anderson, president and CEO of SWIF. “It’s a benefit to the employees. It provides them with resources and an on-site person to help them navigate challenges that oftentimes have nothing to do with work.” members of these personal networks, impressed with the company culture and clear commitment to its employees, then applied to the company themselves. Anderson believes the impact of an ERN reaches far beyond a single company. According to her, these networks are closely tied to SWIF’s mission of building strong, successful families and communities within southwest Minnesota. It’s much more than economic development — it’s about supporting “communities, businesses, families and kids from cradle to career.” “It’s a win-win-win,” Anderson says. “It’s a win for employees, it’s a win for employers, and it’s a win for the community.” —Grace Bureau

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Jim Schottmuller applies lessons learned from his parents.

Inside Enterprise Minnesota

An ongoing series.

TRUSTED ADVISOR

‘Listen First’ Approach Enterprise Minnesota’s Jim Schottmuller aims to solve clients’ challenges by first listening to how they describe them.

nterprise Minnesota’s Jim Schottmuller truly identifies as a “people person,” using his talents to connect with clients on a personal level. Through his role as a business developer, Schottmuller embraces challenges both in his personal and professional life. Born and raised in Roseville and Stillwater, Minn., Schottmuller learned early in life the value of hard work, craftsmanship, and problem solving. He first worked in the family furniture restoration business at age 13, which gave him the skills to eventually take

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on renovation projects of his own, including being the general contractor in the construction of his own home in Forest Lake. That experience nurtured his mechanical-minded curiosity that helps him assist his clients with tackling a variety of challenges. “Ever since I was a kid, I enjoyed taking things apart, or fixing broken things my friends gave me and figuring out how they work. The mechanic in me loves the ‘how’ and ‘why.’” Schottmuller’s passion for sales and development made him a good fit as Enterprise Minnesota’s relationship

manager, his first role at the company. After leaving to take on a director role at a local manufacturer he later returned to Enterprise Minnesota as a full-time business developer. “I very reluctantly left my Enterprise Minnesota job, having fallen in love with the people, the experience, and the day-to-day interactions. When I decided to leave the other company, I reached out to the friends I still had at Enterprise Minnesota, and it just so happened an immediate opportunity was available. It was almost too good to be true. I was rehired within a week.” The position turned out be a natural fit, and in 2020 Schottmuller’s colleagues voted to give him the company’s Esteemed Colleague award, an accolade that recognizes the person who year-overyear stands out as representing the best of Enterprise Minnesota and achieves outstanding results for clients and stakeholders. His colleagues credit his success with three attributes. First, he is happiest when face-to-face

with clients. He credits Enterprise Minnesota’s Bob Kill for teaching him the value of personal attention. “Bob tells us all that this job isn’t for a ‘transactional’ person, someone who’s in it just for the next sale. I always strive to be a trusted advisor, not a paid consultant.” Accordingly, Schottmuller uses a “listen first” approach with his manufacturers, the second factor of his success. The initial step to solving problems, he says, is listening to how clients describe them. “I want to be their first call for help. If I can’t propose a way for Enterprise Minnesota to fix a problem, then I’ll find someone outside our organization who might be able to help them.” Finally, his coworkers credit the way he views challenges as opportunities, not roadblocks. “Every company has a unique way of doing things — even within industries. It requires a higher level of engagement that I find exciting. One thing I missed during my time away from Enterprise Minnesota was having boots on the ground and touring different facilities.” He especially enjoys how he has helped revive the Enterprise Minnesota Peer Council in his territory of northeast Minnesota. With all his clients, Schottmuller serves as a facilitator. He sees the challenges they face, such as labor shortages and supply chain issues, and offers problem-solving solutions. “But the real satisfaction comes from seeing them take ownership and guide their own path,” he says. When Schottmuller isn’t on the road, he spends time with his wife of 21 years, Angie, who herself is a business consultant and Army veteran, and their long-haired German Shepherd Saba. He also enjoys challenging his nephew to tennis matches since retiring his hockey skates (he played college hockey at Bethel University). And Schottmuller continues to be in awe of his mother, Gena, who still volunteers at age 85. His father Jerry, who passed away in 2001, taught Schottmuller much of his problem-solving skills and how to have a can-do attitude, pay attention to detail, and develop an appreciation of craftsmanship. A former Army drill instructor, Jerry instilled in his son drive, a high standard of ethics, and the value of quality in everything he does — attributes that Schottmuller contributes to much of his success today. —Jenna Stocker

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Four Questions Devinder Malhotra, chancellor of Minnesota State

ow have demographic shifts and the COVID economy affected your approach to higher ed? As is true of Minnesota’s population, the diversity of our colleges and universities has been increasing. We serve over 68,000 low-income students, over 66,000 Black and Indigenous students and students of color, and many of our students are the first in their families to attend college. It is important to realize that this diverse group of students represents both the future of our state’s population as well as the future of its workforce. Of course, the pandemic is having a tremendous impact, including

Chancellor Devinder Malhotra oversees Minnesota State, which includes 30 colleges and seven universities located in 47 different communities. Minnesota State serves approximately 340,000 students in credit programs and through customized training.

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changing the way our students learn. Before the pandemic, 27% of our class credits were online; now it has moved to about 50%, although that varies across institutions. Two thirds of our classes are currently delivered either online or in hybrid modality. But it is hard to put some technical programs like welding or mechatronics online, so we continue to offer in-person programming as well, observing the precautions recommended by the MDH and the CDC. As has been true throughout the pandemic, our top priorities are protecting the health and safety of our students, our faculty, and our staff, and supporting our students as they continue their progress toward their educational goals. For the manufacturing sector during the pandemic (beginning spring semester 2020 ), we have offered over 500 academic programs, served nearly 15,000 students, and graduated over 4,000 students who were immediately available to meet workforce needs in manufacturing. What are your thoughts on how Minnesota State might grow and expand its programs in manufacturing? We have to look at both the future of work and the work of the future. The workforce shortages of today mean that we need to get additional individuals in certain areas. But a large part of what we do is offering incumbent workers access to training and education to increase their productivity while they are still working. For example, with funding from the National Science Foundation, the Vacuum and Thin Film Technology program at Normandale Community College developed distance delivery capabilities that make the courses available throughout the state and

INNOVATIONS

especially benefit incumbent workers. We are by far the state’s largest provider of customized training and continuing education. Our Comprehensive Workforce Solutions initiative is building capacity among our colleges and universities by leveraging expertise in continuing education and customized training that exists on individual campuses and offering it throughout Minnesota. We also have innovative for-credit programs for meeting workforce needs: Since fall 2019, over 600 students in advanced manufacturing have been awarded

[A] large part of what we do is offering incumbent workers access to training and education to increase their productivity while they are still working. Workforce Development Scholarships that were funded in partnership with the legislature, and the Minnesota Job Skills Program grants act as a catalyst between business and education in developing cooperative training projects that provide training for new jobs or retraining existing employees. Recently, the Minnesota Department of Employment and Economic Development (DEED) awarded 13 of these grants to assist businesses and several colleges and universities of Minnesota State train workers to keep high-quality jobs in the state. What is your message to manufacturers who need help meeting their workforce needs? Relationships between manufacturers and colleges and universities are sometimes very transactional in the sense that colleges produce graduates with the skills that manufacturers need,

and manufacturers hire them. But the most beneficial relationships are more transformative — for example, manufacturers form partnerships with their local college or university and help shape curriculum or provide access to the latest technology to ensure graduates have the skills manufacturers need. Northland Community and Technical College and Marvin recently formed a partnership to develop a first-of-its-kind program in mechatronics that enables students to structure their learning around individual needs and advance at their own pace. Such partnerships provide very powerful, transformative relationships, where industry and higher ed institutions together take ownership of the learning, competencies and talent development. Many of these partnerships already exist, but we need for more of them to find creative ways of providing instruction, including apprenticeships and work-based learning.

As you face this transformation in education, what’s your message to elected officials about the state’s role in meeting workforce needs in manufacturing? We are very thankful for the partnership we have with the governor and the legislature. They understand that manufacturers

The colleges and universities of Minnesota State produce 95% of the state’s graduates in manufacturing. throughout Minnesota are facing a daunting shortage of workers — Enterprise Minnesota’s State of Manufacturing® survey shows that this is one of the top concerns of manufacturers. Minnesota State plays an essential role in growing

Minnesota’s economy and opening the doors of educational opportunity to all Minnesotans, and this is certainly true in the manufacturing sector. The colleges and universities of Minnesota State produce 95% of the state’s graduates in manufacturing. Tomorrow’s workforce is going to be increasingly diverse, and tomorrow’s employers will be looking for workers with more advanced education. More jobs will require post-secondary credentials. To meet these needs, we must do more to serve populations that have had the lowest rates of participation in higher education. That is why we must recognize that meeting Minnesota’s workforce needs of the future requires eliminating disparities and inequities in education. This is the goal we have set in our Equity 2030 initiative. This is not just a moral imperative – it is an imperative for maintaining the vibrancy of the state’s economy.

SPRING 2022 ENTERPRISE MINNESOTA /

Great Ideas

Small Town,

Worldwide From a plant in tiny Karlstad, Mattracks manufactures rubber track conversions for customers in more than 100 countries.

By Sue Bruns 18

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SPRING 2022

Father and son, Glen and Matt Brazier, continue their collaboration at Mattracks.

hen Glen Brazier’s 11-year-old son Matt drew a picture of a pickup with four tracks in place of wheels and asked, “Could we make something like this?” neither of them imagined that three decades later, Mattracks would be shipping out the 100,000th track system from their plant in Karlstad, Minn. After years of prototypes, over 50 patents and patents pending, and 26 years of production, Mattracks has sold over 150 track models in over 40 tread styles and in more than 100 countries on all seven continents. Mattracks was the first company in the world to offer rubber track conversions, starting with their Model 86 for pickups — and the company has been first in each industry application from pickups and SUVs to ATVs, tractors, military vehicles, and more.

From farm boy to inventor

To date, the company hasn’t had to recruit much, but with the growth the company is experiencing, Laux acknowledges that they will need to become more proactive and search out the employees they need.

Early on, Mattracks caught the attention of the international market

Soon after production began, Brazier says, Mattracks caught the attention of Popular Science Magazine, which ran a profile of the company in 1994. CNN saw the story, called him, and sent a crew to tape a segment for a Science and Discovery feature. The segment attracted interest from foreign companies and the U.S. military. Before long, Brazier was increasing his sales staff to keep up with the international demand and having discussions with four-star generals about military applications for Mattracks. In 2001, the company’s new track conversion systems for ATVs added another dimension to the market. In 2002, Mattracks introduced tracks with front-wheel assists for tractors, and additional agricultural applications followed. Continuous improvement of their tracks for faster, smoother rides, and better traction and steering has made Mattracks the largest track conversion manufacturer in the world in terms of volume and variety. Today their tracks are found on everything from emergency vehicles and trail groomers to Hollywood movie creations.

Glen grew up on a small farm in Greenbush, Minn. After high school, he studied aviation, which helped him apply engineering, metallurgy, and electrical skills to his natural curiosity, inventiveness, and problem-solving skills that launched him into an international business. (He’s also a licensed pilot and aviation technician and owns four planes.) Initially, Brazier explored the rubber tracks conversion idea as a sideline but continued to design and improve the concept for two years, patenting it in 1994. Looking for a good place to set up shop, he found an abandoned potato warehouse complex in Karlstad, just In the early 2000s, Mattracks met Mattracks go far 19 miles west of Greenbush and 35 beyond winter use miles south of the Canadian border. Hollywood when the company was Manufactured in the northwest Mattracks started with only six contracted to build tracks for five corner of Minnesota, it might employees; today there are 50, and Brazier anticipates a need Terminator 3 robots (one of which is now be assumed the primary use of the company’s tracks is for for again as many in the next two on display at the Mattracks museum). snow travel, but, says Laux, “the to three years. While hiring and tracks are used year-round for retaining quality workers can be Brazier declined an invitation to farming, construction, exploration, challenging in the hinterlands, half attend several days of filming. emergency services, pipeline of his employees have been there “We didn’t have time,” he says. maintenance, telecommunications for more than 10 years and 11 of [and more]. Every off-road them for over 20 years. Brazier application can benefit from believes retention has been strong increased traction and reduced compaction. Tracks offer a smoother partly because of the product and its variety and partly because of and more stable ride as well in rough terrain.” the atmosphere at the plant. In the beginning, Laux says, “the goal was to see if we could Mattracks Vice President Dan Laux says, “We foresee just make something work. We didn’t foresee that we would exponential growth in the coming years as the market has begun revolutionize off-road mobility across all markets.” to realize all the advantages tracks entail.” He points out that Today, in addition to the Mattracks manufacturing campus with everything at Mattracks is designed, manufactured, marketed, three large buildings for production, sales, shipping and research and sold right out of Karlstad and that the workforce is varied and and development, Brazier has started a Mattracks museum on includes engineers, salesmen, marketing professionals, welders, Karlstad’s main street. Inside are displays that trace the company’s machinists, painters, assembly line workers, test drivers, quality evolution and a sampling of the tracks’ unique applications from team, purchasing, inventory control, customer service, field early attempts for personal vehicle conversions to military vehicles technicians, and polymer technicians who mold the rubber treads. and robots for entertainment and advertising. Among the items “We are a worldwide company with a small-town feel,” Laux on display is a two-tracked 7Up vending machine created for a adds. “Our biggest challenge will be keeping up and growing our Superbowl commercial in 2003. workforce. As far as challenges go, that is the kind we like.” SPRING 2022 ENTERPRISE MINNESOTA /

In the early 2000s, Mattracks met Hollywood when the company was contracted to build tracks for five Terminator 3 robots (one of which is now on display at the Mattracks museum). Brazier declined an invitation to attend several days of filming. “We didn’t have time,” he says. “We’re busy every day with Mattracks is an essential something new and exciting.” backer of Karlstad’s annual Since Terminator 3, Kick’n Up Kountry Music Festival. Mattracks has been a part of several other movie projects, creating tracks for on-screen mechanical wonders or for behind-the-scenes vehicles for film crews to capture action sequences up close. “Fury with Brad Pitt was shot with Mattracks equipment,” Brazier says. Reflecting on the growth and popularity of Mattracks years. “It’s a big deal for us. There’s still over the past 25 years, Brazier says, “It’s a lot to do, but the city has invested a lot been a heck of a ride,” (possible pun recently in local infrastructure, for which intended). And the ride continues with new there is no funding source.” The current possibilities every day. airport, Nelson continues, “is located Mattracks have appeared everywhere in a swampy area with trees on both from the South Pole to the North, and from sides.” Although the Airport Commission Hollywood studios to NASA testing at the looked at ways to expand and upgrade that Mars Institute (which its website describes facility, the location was not amenable to as “an international, non-governmental, the drastic improvements needed. non-profit research organization dedicated “A new airport will be government to advancing the scientific study, funded and maintained,” Nelson says, “and exploration, and public understanding the city will benefit from fuel sales and of Mars”). It’s not difficult to imagine other fees,” not to mention the convenience applications for Mattracks on the rugged to numerous northern Minnesota businesses terrain of Earth’s closest neighboring of a major runway and, eventually, facilities planet. that will benefit the entire northwest region Mattracks: An international of the state. company that gives back to Alan Lundeen, plant manager of Wiktel the community and chairman of the Airport Commission While Mattracks’ impact is seen all over the Board, has been a key player in the airport world (and may someday be seen millions project. Lundeen says MnDOT Aeronautics of miles away), the company’s local impact inspections of the existing airport in 2015 is equally impressive. For Brazier, giving and 2017 noted several deficiencies of back to this small Scandinavian community the 1950s-built municipal airport with its (population 760) benefits everyone. He’s 2,600-foot turf runway and spelled out the been a strong proponent of a proposed requirements that were needed in order to FAA-approved airport in Karlstad. While keep the little airport open. MnDOT also the Wikstrom Telephone Company explained funding of airport development (Wiktel), Karlstad’s other major employer and maintenance. “This was the spark,” and community supporter, provides the Lundeen says, “to research how to best area with top-quality high-speed internet, maintain and improve our facility.” After a the airport will bring additional 21st-century great deal of effort, information gathering, infrastructure to the city, the county, and grant writing, planning, and two years of the state. proposing the new airport to the Minnesota Karlstad’s mayor, Dale Nelson, says legislature, $5.6 million was approved in plans have been in the works for about five the 2021 transportation bill for the first 20

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new airport in Minnesota in almost 20 years. The new airport will not only benefit the pilots of the area but will contribute to everything from health and medical services to manufacturing and outdoor recreation opportunities. (Karlstad is about an hour and a half drive from Lake of the Woods.) Brazier sees the addition of the FAA approved airport with a paved 4,000foot runway as a major development for Mattracks and for other manufacturers in northwestern Minnesota. The airport will increase job opportunities and economic development throughout and beyond Kittson County.

Community support means more than economic impact

Brazier also invests in the community in other ways. When approached by Ardell Larson almost two decades ago to become a sponsor of a country music festival, he helped fund Kick’n Up Kountry. Not only has he continued to support the annual festival, he has purchased and developed land to host the event. Today the 360-acre site, just outside of Karlstad, has over 200 VIP camping hookups and countless standard camping sites, more than adequate

Matt Brazier:

Mattracks’ Jack of All Trades

For Brazier, giving back to this small Scandinavian community (population 760) benefits everyone. parking, and plenty of space for the 15,000 concert goers who attended in 2021. He has also used the site to preserve historic buildings from the area and has relocated a 100-year-old church from Pelan (northeast of Karlstad) and the old Karlstad railroad depot onto the property. The church is available for non-denominational services, weddings, and other events. The first year of Kick’n Up Kountry (2004, held in Hallock), the family of a 14-year-old girl with leukemia came to the concert. Her parents hoped their daughter could meet her favorite musician, Neal McCoy, who gladly obliged. That request sparked the idea for Hopes, Dreams & Smiles, an organization founded three years later by the festival’s original CEO Ardell Larson that brings children with life threatening illnesses and a love of country music to the event for free. Since then, Larson and Brazier have hosted several families at the festival each year, providing limousine transportation, special seating for the concert, and other amenities. To further enhance the festival experience, Brazier created his own Adventure World Tour at the site, featuring a hand-made train engine that pulls three passenger cars (all on Mattracks). As riders wind along the Baja route through woods and cattails, mechanical surprises appear

Matt Brazier’s contributions to the Mattracks company go well beyond the drawing he did that inspired the manufacturer’s product line and beyond his name being half of the company’s name. Matt started working after school in the shop at 15, doing “pretty much all the jobs that nobody else wanted. I swept the floor, I did grinding, welding.” He was good at the work, enjoyed it and earned his way up the ranks, learning a variety of trade skills. “I’ve done almost every single job involved in Mattracks,” he says. No one knew the company would grow to the extent it has, but, Matt says, “we made such a unique product that no matter where we went, no matter what show we did, there was just unbelievable response to it. I knew we were going to be an exciting new company, and we still are.” For as long as Matt can remember, he’s enjoyed creating things. “My dad was always inventing things,” Matt says. Not simple, ordinary things, but things like a gyrocopter or a hovercraft. “When I was really young, I had garbage cans full of Legos, and I just wanted to build stuff.” Now with a title of Special Operations Coordinator, he is, as his dad describes him, a jack of all trades. Matt says, “If we need help in the shop, I’ll do that; if I need to fly to Louisiana, I’ll do that. I did 22 trade shows in one year and was on the road over 200 days.” When he was about 17, he says, “we went to a military trade show in Burbank, Calif. I ended up meeting Wesley Clark, who was the Army’s Supreme Commander. I also met 14 generals — four of them four-star generals.” Pretty impressive people to do business with. Meeting MythBusters’ Jamie Hyneman and Adam Savage was another early brush with fame. “We get to fly all over the world and meet customers. If they have needs we can meet, I take care of that.” The excitement in Matt’s voice is evident as he reflects on the opportunities he’s already had, the places he’s been, and the variety of companies he’s dealt with. “Our product is so cool, and it helps so many companies do what they need to do — and then makes them money. It’s really exciting.” Probably the hardest part of the job, Matt says, is being the boss’ son. People know what his dad Glen has done, what he has built, but they’re not always aware of the extent of Matt’s involvement in and contributions to the company. “I couldn’t be prouder of my dad, and I’m really thankful that I get to work with him on a daily basis,” he says. There’s no doubt, however, that Matt has earned his place in the company. Matt’s two daughters, ages eight and nine, already love riding around on four-wheelers and building things with Legos. And if they decide to be a part of Mattracks someday, they’ll have opportunities to earn places there, too.

and spring out — everything from a raptor, a T-rex, and a huge spider to a spaceship and space alien eggs. (A pirate ship is in the plans.) The tour guide and engineer is Glen Brazier himself, whose enjoyment of the task would lead one to believe his sole purpose in creating Mattracks was to see passengers smile as they rode the Karlstad

amusement park ride. It’s especially fitting to see kids and families enjoying the benefits of a smalltown, international company that started with a drawing by 11-year-old Matt Brazier, now a 41-year-old jack of all trades with a company that has taken him and his dad around the world. SPRING 2022 ENTERPRISE MINNESOTA /

Profile

CAN YOU

HEAR ME NOW?

he adage, “Necessity is the mother of invention,” has applied time and again to the Eden Prairie-based manufacturer and innovator of products in the audio/ visual space. The genesis of its product line dates back to 1975, when Jerry Williams, an experienced engineer by trade, created a new wireless device to enable parishioners at his church to hear the pastor. As the company expanded its offerings in the ensuing decades to respond to new needs, Williams Sound became Williams AV (WAV). Which brings us to today. Led by president and CEO Brad Kautzer, perhaps WAV’s most important innovation was the re-invention the company undertook out of necessity for its survival.

Business management – Remaking a vision

WAV faced uncertainty during the pandemic. But in the face of adversity, WAV saw an opportunity to explore new supply sources and further refine its production floor operations.

Tariffs and COVID impact COVID dramatically interrupted WAV’s supply continuity as the company relied heavily on electronic components being readily available, as well as China-based contract manufacturers to complement its Minnesota-based operations. Additionally, U.S. tariffs enacted in 2018-19 had a profound impact on product costs that made a wide range of products uncompetitive in a global market. WAV resolved these issues by re-engineering several key products and shifting high volume production to a Vietnam-based supply chain supported by a new strategic manufacturing partner. All of this was executed during the pandemic, which required extensive cross-functional efforts across the entire organization. This alleviated a significant cost pain caused by the tariffs and helped WAV stay ahead of the uncertainties that came about during COVID. Another factor that contributed to WAV’s successful navigation through a year of worldwide business turmoil was its

By Jenna Stocker

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prioritization of existing resources on reliable technology and product offerings. Nothing showcased this better than WAV’s shift to providing communication technology to businesses that faced extreme communication challenges due to COVID protocols, notably the judicial and medical markets. Seizing these market opportunities helped establish the company as a leader in these spaces, deploying advanced technology solutions that could safely bring people back together and keep important economic and social systems running in a new way. Re-evaluating production performance While the business world worked to right itself, WAV took the temporary market slowdown to re-evaluate its internal processes and look for opportunities to improve operating efficiencies and quality systems. With the leadership of production manager Tim Miller, manufacturing engineer Nick Richie, and quality manager Chris Clark, WAV underwent a wall-to-wall production evaluation and reset. This team worked together to make changes to the company’s operating principles and quality operating system so that its operations were more rigid, simple, and accountable to key business needs. The results were improvements in quality, efficiency, and cost reductions. WAV incorporated the 5S lean manufacturing methodology: Sort, Set in order, Shine, Standardize, and Sustain. Using these five principles as the benchmark for continuous improvement on the production floor, the team set the stage for a trajectory toward sustainable success. In keeping with a new lean standard of operations, the management team worked with other employees to make additional significant changes, such as removing substantial amounts of outdated testing equipment and unused machinery to free space for a complete reconfiguration of the production floor. The quality operating system also received a thorough review. Electrostatic discharge (ESD) is a major concern in an electronics-based manufacturing company. ESD can shorten the lifespan of electronic products or even render them unusable.

WAV’s management team evaluated the risk level in the production area and found it to be unacceptably high. To ensure high quality, reduce repairs, and reduce the level of returns and malfunctions, the company implemented ESD controls. This demonstrated to customers and

Brad Kautzer was appointed president and CEO in May 2020.

employees WAV’s commitment to safety and consistently reliable products. Other improvements included a redesign to the production floor to comply with OSHA requirements and improve workforce flow, an important step to eliminate waste and enhance efficiency. Communication is key The team recognized that many issues were rooted in communication, documentation, and procedure controls. A major part of the solution was in standardizing these measures. Employees then had a clear chain of procedures and communication to follow to efficiently solve problems as they arise, instead of allowing them to grow and affect other areas of the workforce. Standardizing communication methods also gives workers confidence that orders will be addressed in a timely, attentive manner. Additionally, WAV implemented two

important aspects of communication: daily stand-ups and enhanced documentation/ standard work. The day starts with a 15-minute stand-up meeting where employees and production operators meet to review daily goals and communicate issues that could result in production delays. These morning meetings are held on the production floor and include representatives from each of the functional areas as well as the full production team. The team discusses issues that could impact daily output and resolves any critical customer needs. The meetings provide visual management, accountability to gain alignment across all business functions daily, and the venue to recognize employee accomplishments. Prioritizing quality and workers Quality Assurance is a necessity to prevent mistakes and defects in manufactured products and focuses quality management on fulfilling orders. Using the new procedures also gave employees guidelines, and consequently the confidence that they are delivering standardized, high-quality products. Quality Assurance improves employee engagement, helps inspire pride and trust, and encourages accountability because everyone has a responsibility to ensure quality products. Turning inward to find improvements and encouraging workers to take ownership of quality control and communication helped WAV become an industry leader, not only measured by its products but by its employees. Brad Kautzer and the WAV leadership team actively foster a culture of innovation, quality, and service, which has positively impacted the company’s bottom line. WAV just finished 2021 recording new highs in cost-savings, revenue, and profitability.

COVID starts a new era

By offering such a wide range of products, WAV embraces the goal of inclusivity and innovation. WAV further extended its offerings to include a secure digital communications device called Digi-Wave. Since the beginning of the pandemic, trials and court-hearings were delayed, SPRING 2022 ENTERPRISE MINNESOTA /

as courts worked to find effective ways to communicate while balancing constitutional rights and privacy with safety and public health risks. Digi-Wave provided the solution that courts were looking for at a time when it was needed most. Because of the risk of COVID-19 infection, courtrooms had to provide adequate social distancing. Along with masking requirements, this limited the number of people who could occupy a room. It also affected how attorneys could communicate with their clients, the judge, and the jury. Digi-Wave solved these issues by eliminating the need for a closequarter encounter while maintaining secure communications channels for privacy. DigiWave’s secure audio system allowed the defense and prosecution to speak privately while maintaining a safe distance. They could also speak with the judge on a private channel when needed. Additionally, WAV’s Annotation Pro+ product enables attorneys to highlight key pieces of evidence, improving communications among those in the courtroom. Thanks in part to

Digi-Wave provided the solution that courts were looking for at a time when it was needed most. WAV’s technology, the large backlogs of courtroom hearings are showing signs of easing.

Historic innovation

After solving the problem with his church, founder Jerry Williams developed the “Pocketalker,” a personal sound amplification device. The Pocketalker amplifies sounds closest to the listener while reducing background noise. WAV offers several models and configurations of the Pocketalkers to meet the needs of people requiring hearing assistance, such as improving their ability to engage in communications in nearly any environment. Williams pioneered the assistive listening device space with his Pocketalker. Over the course of the next three decades, Williams Sound continued to be an industry innovator by establishing multiple products and technologies for assistive listening devises and incorporating various methods of audio transmission such as FM, infrared, digital, and even induction loop 24

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Left to right: Tim Miller (production manager), Nick Richie (manufacturing engineer), and Chris Clark (quality manager).

systems, which transmit directly to users’ hearing aids. In addition, WAV’s Wi-Fi technologies allow for streaming audio directly to a user’s personal smartphone or tablet through Wi-Fi transmitters and offer secure encrypted communication.

Focus on annotation

Not a company content with being idle, Williams Sound took a big step in expanding its offerings in 2017 when it acquired Pointmaker. Pointmaker was the leading provider of hardware and software for the growing video annotation market, and the acquisition signaled Williams Sound’s foray into the larger professional audio/visual market. Williams built on and enhanced Pointmaker’s video technology, renaming it Annotation Pro and Annotation Pro+. The Annotation Pro products increased the company’s market opportunities by allowing individuals to draw a freehand sketch over live or still video images. This technology is frequently used in courtrooms, classrooms, corporate presentations, sports, and weather broadcasts. “The Pointmaker acquisition opened an opportunity to combine Williams Sound’s technological knowledge and direct it to the expanding video market,” says Kautzer. Confident in its place at the forefront of audio/visual communication systems, the company changed its name to Williams AV (WAV) to reflect its broader offering in the market with more videocentric innovations.

ADA provides opportunities for new hearing technologies

The Americans with Disabilities Act of 1990 opened the opportunity for WAV to make a real, tangible difference in the lives of millions of people in the United

States. According to the legislation, the ADA requires covered employers to provide reasonable accommodations to employees with disabilities — including hearing impairment — and imposes accessibility requirements on public accommodations. WAV’s technologies not only assist people with hearing impairments, but the company’s products also ensure employers and businesses meet ADA regulations. The company’s website even offers an ADA calculator to help businesses find the number of audio receivers the ADA requires for a space. It is this type of forward-thinking and website accessibility that builds relationships between WAV and its clients. An exceptional team is eager to assist with both their consumer products as well as professional AV products. Inclusion and engagement are not just a slogan; they are a mindset.

New offerings to meet new demands

By offering such a wide range of products, WAV encompasses the mantra of inclusivity and innovation. In today’s world, where communication is an integral part of being successful, WAV has the technology to improve communication across language, culture, and ability roadblocks. In 2019, WAV introduced the next generation of assistive listening devices. The company rolled out a series of devices to fulfill a demand in professional settings to broadcast sound through Wi-Fi, FM, and Bluetooth systems with its Dante Assistive Listening System. Guided tours WAV uses its portable technology to

offer audio solutions for guided tours and intercoms in commercial settings. From Wi-Fi, FM, hearing loop technology, and infrared, WAV technology has the capability to meet a variety of needs, from walking tours to commercial presentations. Interpretation and translation In a world that is becoming increasingly interconnected, language and location barriers are affecting business worldwide. WAV helps break down those barriers by offering AI-based (artificial intelligence) interpretation and human translation services. This was a key component to helping companies adapt to the COVID environment in which Zoom meetings became more prevalent.

Incorporating artificial intelligence

COVID also spurred further development in new AI technology. In a world that is increasingly interconnected, language and hearing barriers can have a real impact on business. WAV saw this as a real challenge and began incorporating

AI into its product offerings. WAV was an innovator in the truest sense, becoming the first company in the industry to use AI with its Caption Assist and Convey Video as a viable option when humans are not available for interpretation, or when human interpretation doesn’t fit within the scope of a company’s budget. This emerging field has many professional applications and lends itself to today’s global economy and international markets. According to WAV, a computer can caption live audio into text and even translate it. It works using WAV devices that apply AI-based captioning and translation and then output the captioning and/or translation directly to a display as an overlay. The video, image, or presentation that the audience is viewing will still show on the display along with the captions or translated subtitles. Currently, the device can translate over 109 languages and 28 dialects. Kautzer explains, “Utilizing leadingedge AI-based technology, Convey Video enhances communications across boundaries and languages. Whether it is enhancing comprehension in higher

education, translation and recording in judicial, medical, and law enforcement, or improving global business communications effectiveness, Convey Video does what no other solution can offer. Using the latest available technology integrated into one package, Williams AV offers solutions to meet a range of uses.”

Forging ahead

AI-based innovation is the latest example of how WAV recognized the value of emerging technology and incorporated it into existing devices and products. This forward-thinking mentality highlights the importance of staying abreast of industry changes as our technology-driven world continues to evolve faster and faster. With many companies struggling to stay relevant, WAV certainly accomplishes this, and then some. Looking at each emerging technology as an opportunity to innovate is a lesson many manufacturing companies can learn from, whether it is through automation, artificial intelligence, streamlining production floor operations, or re-evaluating supply chain management operations.

GROWING COMPANIES ENHANCING COMMUNITIES

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SPRING 2022 ENTERPRISE MINNESOTA /

Peer to Peer

LEARNING

Enterprise Minnesota’s peer councils enable manufacturing executives to get advice from people who know best: each other. By Suzy Frisch Pictured above from left to right: Ally Johnston and Dawn Loberg (Enterprise

Minnesota), Joby Goerges (Magnum Research), Jason Hammerback (Darter Plastics), Bill Pattison (West Central Steel), Scott Manea (SNX Precision), Mike Hanson (Hanson Silo), Lance Louis (Louis Industries), Scott Christman (Seitz Stainless), Randy Pelletier (Pellco Machine), and Jake Altendorf (Carstens Industries).

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oby Goerges had plenty to show his fellow manufacturers uniting behind their common roots in manufacturing to share truly when he opened the doors of Magnum Research for a tour relevant perspectives with the group. The councils provide members — from the company’s skilled technicians to its smoothwith a confidential setting to discuss areas of concern and common flowing production processes. But as it often happens, the industry challenges. wow factor came when he presented Magnum’s Desert Jake Altendorf, owner of Carstens Industries in Melrose, became Eagle pistol. part of the St. Cloud group in 2018 shortly after going to work at the So famous that it has its own Wiki page, the Desert manufacturer of fiberglass and composite products, including boats Eagle and other firearms made by Magnum usually are the and bathtubs. He had joined Carstens after working in the investhighlight of tours, says Goerges, director of manufacturing. ment sector, and he sought business advice after purchasing the That’s because people have seen the guns on hundreds of company from family members. television shows, movies, and video games — including The TermiBeing new to the area and the manufacturing sector, Altendorf nator, The Walking Dead, and Call of Duty — and they want to get wanted a space to consult with other business leaders about a wealth an up-close-and-personal view of the distinctive firearm. of concerns, such as customer and employee relations. That was the case this fall when Goerges took his Enterprise “Whether it’s an issue with pricing or corporate governance, or Minnesota peer council on a tour of Magnum’s facility in Pillager, one of them has an experience that directly relates to what I’m trynear Brainerd. “The Desert Eagle brings out the kid in everyone. It ing to accomplish, it’s proven very valuable at points where I felt is something to see. It’s a massive handgun, and it’s really impreslost and didn’t have a lot of tools,” he says. sive,” Goerges says. Thanks to the peer council, Altendorf ef“We were in the middle of production, and the fectively handled various issues after gathering peer council members got to see the parts that insight from other business leaders who have Each quarter, were getting built and going out the door,” he experienced similar situations. “It has been really the peer council adds. “Our motto is, ‘Quality people doing quality helpful, coming from someone with a little less work,’ and I wanted to show them people takexperience, to be able to pick the brains of people takes its show on ing pride in their work and building really good who have been doing this for 20, 30 or 40 years the road and products.” with different sized businesses in different industours one of the Goerges was happy to show off Magnum’s tries — not just fiberglass companies,” Altendorf operations, but it wasn’t a one-sided encounter. As adds. member’s facilities. a member of the St. Cloud CEO peer council, he Peer council members often fill gaps for gains much from engaging with his fellow central smaller companies that might not have specific Minnesota manufacturers, whether it’s at his facility or theirs. This expertise in-house. For example, many of the peer council members group of about a dozen executives from small- and medium-sized don’t have human resources specialists on staff. So, it’s especially manufacturers learn from each other and serve as sounding boards helpful to learn about other manufacturers’ benefits, compensation for the similar challenges they face. structures, or workforce policies, Goerges says. Located throughout the state, the peer councils meet monthly In fact, nearly half of the issues before the peer council cover with Enterprise Minnesota business growth and development conpeople-related concerns, including employee engagement and sultants who facilitate programs and discussions. The St. Cloudcompensation matters like salaries and bonuses, Loberg says. Other based peer council has flourished during the past 12 years, with its common topics include planning for capital expenditures, fostering members turning to each other regularly for counsel, with questions, growth, and developing as leaders. and even to do business, says Dawn Loberg, a business developRunning a business during the COVID era has presented a whole ment consultant for Enterprise Minnesota. host of unique challenges, and the peer council has been a helpful Many of the members share a desire to learn from others and vehicle for managing through it, says Scott Christman of Avoncontinue to improve their companies. Some peer council members based Seitz Stainless, who joined the company as general manager are earlier in their career while others are veterans, but they all bring in early 2020. Peer council members consulted each other on didifferent perspectives and experiences that help each other, Loberg verse issues such as protocols and best practices for running a plant says. during COVID. They also shared information about supports like “This group has developed into such a resource for each other. the federal Paycheck Protection Program and other small business They call each other during the week and get together in between initiatives. meetings, and they also like to go have fun and celebrate their suc“Rules and guidelines were changing weekly if not daily, and cesses,” Loberg continues. “They are very forthright, and they are none of us knew what to do,” Christman says. “We used each other good listeners. They are still trying to learn, even though some of as sounding boards — not only at council meetings but in comthem have been president of their companies for 20 years.” munications and correspondence between meetings. We all learned collectively and from each other.” FREE-WHEELING CONSULTATION For Anne Haakenson, manager of Avon Plastics in Paynesville, it For 22 years, Enterprise Minnesota’s peer councils have brought has been vital to consult with other manufacturers about dual prestogether CEOs and other top leaders of manufacturing companies in sure from increases in labor and material costs. Discussing how to small-group settings. They serve as informal advisors to each other, best implement and communicate price increases to clients and cusSPRING 2022 ENTERPRISE MINNESOTA /

tomers has been a fruitful topic for her. Seasonality also is an issue at Avon, a plastics recycler and manufacturer of home and outdoor products like composite decking and lattice. Haakenson consulted her fellow manufacturers about how to handle challenges with seasonal fluctuations such as staffing and compensation. “That’s a big piece that has been beneficial, especially hearing that we’re not the only ones doing something,” she says. “Or maybe someone has a great idea that’s relevant for us.” At many of the family-owned businesses, succession planning also is a big concern. It’s one reason Haakenson joined the peer council. A third-generation family member at Avon, Haakenson aims to continue developing her leadership skills and discover ways other companies innovate, in preparation for taking on more responsibility at Avon. “What I love about this group is that everybody is in some sort of transition, whether a big corporation bought out the business and now I’m part of a big conglomerate, or I’m second-generation and I’m passing the company on to my children,” she says. “Getting to hear about those experiences is invaluable.” At a recent meeting, an expert on succession planning gave a presentation and then peer council participants shared their

These behind-the-curtain looks at other companies are meaningful for peer council members personally and professionally. experiences. Altendorf, who recently went through the succession process, was happy to give his perspective as the buyer — what he learned and what he would have done differently. He hoped that discussing his experience might provide smoother transitions for others who will be selling or buying a family company in the future.

MEATY MEETINGS

The peer councils gather every month, with other activities like tours and guest presentations mixed in. Led by a facilitator, the meetings have many recurring elements. Attendees give business updates and note whether they are bullish or bear28

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ish on their prospects. Another regular part of the St. Cloud group’s meeting is called “frogs,” which is based on advice from the book Eat That Frog about doing the most difficult task first. Peer council members hold each other accountable if they bring up the same issue two meetings in a row without taking any action, Loberg says. Sometimes a group member just needs to vent frustration over a situation or personnel issue, knowing that fellow business leaders will understand. Often at small companies, co-workers are too close to an issue to have perspective, Altendorf says, or outsiders who are supportive don’t understand the manufacturing specifics. Peer council members just get it. Members then have an opportunity to raise a fast burn — an issue or challenge they would like the group to discuss and perhaps offer advice on. They give background on the concern and tell council members what type of feedback or information they are looking for. “The rest of the group will ask very thoughtful questions and help them think through their options,” Loberg says. “They might provide some historical perspective on what they have done in the past at their companies. It’s not to tell them what to do but to be a counselor.” Fast burns are a meeting highlight, Christman says, because he often learns

Time for fun! Members piled into Sherps, high-end amphibious vehicles that can traverse any terrain.

from other members’ challenges on the issues that keep them up at night. He also gains valuable advice for overcoming the challenges he has been addressing at Seitz, a manufacturer of large stainless-steel tanks, vessels, and other equipment for the food and dairy sectors. “The team is good at providing feedback based on the diversity within the group. Some have contractual experience, some are good with nondisclosure agreements, and some are high-output manufacturers who bring great ideas and value about efficiency and flow,” Christman says. “There are many great viewpoints and areas of expertise that help us each grow as leaders.” Peer council participants are able to be candid because the information they discuss is confidential. On top of that, the St. Cloud peer council shares an easy camaraderie and a bond that often extends beyond its meetings, Loberg says. Not only do the leaders connect over being manufacturers from central Minnesota, they also have become friends who enjoy spending time together. That trust has even led some of the leaders to do business with

each other. Goerges was surprised when he first started attending peer council meetings to see how open members were with each other. “Listening to the group speak about their problems and hearing how much information they all had to share — I was blown away,” he says. “There is a level of comfort, and everyone is very trusting.” Altendorf agrees. “I think the group genuinely enjoys spending time together, and they feel more comfortable sharing for that reason,” he says. “There is mutual respect, and people care what others have to say. That has contributed a lot. People are protective of the group and want to make sure new people are a good fit.”

ON TOUR

Each quarter, the peer council takes its show on the road and tours one of the member’s facilities. It’s a highlight both for the manufacturer giving the tour and those attending — and a vital component of the peer council, Loberg says. The tours allow manufacturers to show off their facilities, equipment, and processes while also bringing any issues they have discussed to life. The group usually saves time for fun and team building, too. After the Magnum tour, peer council members held their meeting at The Getaway, a new property Goerges owns. They piled into Sherps, high-end amphibious vehicles that can traverse any

terrain. Another time, the group took a pontoon ride after their tour at Hanson Silo Company. Christman, an engineer who has worked in manufacturing for 30 years, still learns something new or gets a fresh idea each time he tours another manufacturer’s shop. “As manufacturers, we’re always looking for opportunities for efficiency, for improving our manufacturing and production flow, or for tools used for production planning,” he says. “It’s motivating.” When on the Magnum tour, Christman noticed how the company used communication boards throughout the plant — something he had been wanting to implement at Seitz. He saw how frequently leaders and team members at Magnum consulted the boards and how useful they were in sharing information. Seeing the communication boards in action motivated Christman to make good on his plans to incorporate them at Seitz. He took the first step by creating a communication board in shipping and receiving to speed the process of finding raw materials. He plans to add three more throughout the production floor. So far, the new board has been a big timesaver by providing details about where raw materials are located on the Seitz property. “Now someone can drive a forklift directly to that location instead of spending 10 minutes to track it down. We have

improved communication, and employees have better visibility of our inventory,” Christman says. “It’s a big time gain for something so simple.” For Goerges, touring Seitz Stainless, Louis Industries, and Hanson Silo has been well worth his time. “They just open your eyes to other ways of doing things. They have completely different styles of manufacturing than what we do at Magnum.” “Being able to walk through their process with them and see how they do things is very helpful,” he adds. “It keeps the gears spinning.” Hosting a tour is also helpful for peer council members. Equipment challenges or production issues that were discussed at meetings come to life, allowing visitors to get a fuller picture by seeing the situation in person, Christman says. In other instances, a tour member might bring attention to a safety issue or a process improvement that the leader hadn’t considered. Altendorf finds it helpful to see the operations of manufacturers that make entirely different products than Carstens. “A lot of the businesses are significantly different than we are. It’s helpful to go on site because I pick up things like process flow or what resources they offer employees,” he says. “In some ways there is overlap between us, and in other ways everyone is completely unique.” Back on Goerges’ tour of the Magnum facility, he showed the group how the raw materials come into the building, move through quality control, and then into the parts room. He walked the tour through the company’s Kanban system for managing inventory and product lines, then took them out to the assembly line. Many in the group were surprised that the firearms are meticulously assembled by hand, he says. Then they are tested in the shooting room, packed up, and shipped. These behind-the-curtain looks at other companies are meaningful for peer council members personally and professionally, giving leaders time to learn, swap stories, and bond over their shared love of manufacturing and running profitable businesses. “We’re all humble leaders who really just want to be better. We’re all from a similar community and have a similar objective to grow our business and hire good people and be successful,” Christman says. “We can talk about tough things. We’ve really created a bond with each other and been supportive of each other to make our businesses as successful as possible.” SPRING 2022 ENTERPRISE MINNESOTA /

A Warning

Cyber Insecurities

Enterprise Minnesota’s Bob Kill hosts a panel of three experts who all agree small and medium manufacturers ignore growing cyberattacks at their own peril.

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How do you define cybercrime? Kevin Pomeroy: Right now, most people would define it as ransomware. We hear about it over and over and over again. I talk about it all day. If you turn the news on just about any day, you’ll see that another ransomware attack has occurred at a pretty large level somewhere in the United States. But there are other things besides ransomware. There are social engineering attacks and there are phishing attacks, but the biggest of those is something

“There’s still a learning curve in the manufacturing space. The manufacturing sector moved from being number eight in 2019 for cybercrimes to number two in 2020.” that can lead to ransomware attacks, and that’s where we’re seeing most losses in the insurance landscape. Insurers have realized they are really vulnerable to paying out incredibly large losses, due to what’s currently happening in the world of ransomware. That’s why anyone looking to get cyber insurance right now needs to focus on controls. I’m going to ask everyone about those future controls, but first I want to ask Shalin, why are premiums going up so much? Is it in anticipation of attacks that’ll take place? Shalin Johnson: The loss ratio is the basis on which insurance companies can make a profit. In 2021 a leading cyber insurance carrier reported their loss ratio was 175%. That means for every dollar of premium collected, they paid out $1.75. Some carriers wiped away eight years of profitability in just one year, or maybe 18 months. They can’t get enough premium. Not to mention the fact that the frequency and severity of these claims have gone up significantly. Now it’s a double whammy. Bad actors

hold you hostage by locking up your systems, and then they threaten to publish your sensitive information on the dark web unless you make payment. The average ransomware demand last year was $1.2 million. Kevin? Kevin Pomeroy: It’s not that ransomware attacks are something new, but in the last three or four years, we’re seeing them on a much smaller scale. The larger-scale cyberattacks you would see in health care or retail. A mom-and-pop type shop — relatively small companies — would look at the Target breach and think, “That’s

Participants With more than 20 years of experience in IT and cybersecurity services, Jeff Olejnik oversees the CyberTech practice of Wipfli LLP. He helps clients manage risk through effective information security, business continuity planning, and program management. Jeff is a frequent speaker as well an active participant in various related associations. Kevin Pomeroy leads the Executive and Professional Services Practice Group (EPS) at USI Insurance Services, where his team helps clients manage directors’ and officers’ liability (D&O), professional liability (E&O), data security, privacy liability, employment practices liability (EPL), fiduciary liability and crime. He worked previously at Aon’s Financial Services Group, with a focus on financial institutions and large Fortune 1000 companies. Shalin Johnson is a risk consultant at Marsh & McLennan Agency. He has more than 25 years of industry experience helping clients manage their risk management programs. His involvement in a number of professional organizations helps keep him abreast of new developments in the area of risk management.

SPRING 2022 ENTERPRISE MINNESOTA /

Jeff Olejnik: The number of attackers is also increasing. This is a criminal enterprise. These are gangs. These are nation-states, or even terrorists and underground criminal enterprises, and they run it like a business. Some of them are smart, but you don’t have to be super smart, because you can buy kits on the internet to launch these ransomware attacks. If I have some customer service agents to negotiate with the insurance company, I can be in business pretty quickly.

Jeff Olejnik, principal – CyberTech, Wipfli LLP

not going to happen to me.” Those sevenfigure ransom payments are still around, but the bad actors have learned that they can more easily extort somebody else with poorer controls for $50,000, or $75,000, or $100,000. And if they do it 10 times, they will probably make just as much money, if not more. That’s really what’s pushed the market toward smaller, more vulnerable companies. Jeff, are manufacturers a more vulnerable target than other industries? Jeff Olejnik: Manufacturers are generally softer targets than some of the regulated industries. Financial services have very hardened controls. Health care to a certain extent, as well. The easier path might be to attack a manufacturing company that may not have the resources, personnel, or capabilities to safeguard and respond to these types of attacks. The success rate of these ransomware attacks is much greater against those softer targets. One conclusion is that manufacturers probably should think of this a little bit more strategically than they have been in the past. You have mentioned the increasing dollar volume, but is the frequency of attacks also going up? Shalin Johnson: 32

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Manufacturers’ employees are less sophisticated with respect to cyber. A typical scenario for my manufacturing clients is a sales rep thinking that he’s clicking on a purchase that’s not a purchase order — it’s malware. Before he knows it, this malware has gone through the whole computer system. For a long time, some manufacturers assumed this only happened in retail. They say, “We’re B2B. We don’t deal with the consumers. We’re not handling any credit card information. We don’t have any personal information.” Those days are gone. They now realize that these people can get into the system and shut down production. It just got so fast, so quick. The bad guys are getting in and they’re doing so in a bad way. Manufacturers never thought that it could happen to them. Kevin Pomeroy: The bad actors, the ones doing these attacks, escalated what they were doing faster than the consumer of cyber insurance realized. These criminals are smart. They figure out who really would struggle in the event of a breach. Manufacturing is a great example of a company that cannot afford to be shut down for any long period of time. So, they are more likely to pay the ransom in that scenario, or at least have insurance that will be able to take care of the ransom.

“Manufacturers are generally softer targets than some of the regulated industries. Financial services have very hardened controls. Health care to a certain extent, as well. The easier path might be to attack a manufacturing company that may not have the resources, personnel, or capabilities to safeguard and respond to these types of attacks. The success rate of these ransomware attacks is much greater against those softer targets.” Some companies say they used to be onpremises, but they’re in the cloud now, thinking that’s solved the problem. Jeff Olejnik: You bring up a good point. It’s your data, whether it’s on-premises or in the cloud. The cloud can be more secure, not out of the box, because you have to turn on security controls. If you get Microsoft Office 365 or Amazon Web Services from Amazon, those security controls, like multi-factor authentication (MFA) and email box login, and a bunch of those other tools aren’t enabled right away. You have to enable them. So, during the pandemic,

people rushed to put in these collaboration tools and move everything to the cloud, but they didn’t necessarily think about a lot of the security controls. It sounds to me like this whole thing accelerated when office people started working from home through remote access, etc. Is that true? Jeff Olejnik: Those increased endpoints have to be protected. You still have to make sure that those security controls are in place and that you’re protecting all of your data, no matter where it is. You’ve got to be thinking that through and creating this digital distributed network. It has really expanded the attack surface. What are some of the steps manufacturers should take to protect their systems? Kevin Pomeroy: It does start with multi-factor authentication. There are several different ways to implement MFAs to get insurance

that’s really meaningful. MFA for remote access has become crucial. Remote access to email, remote access to backups, remote access in general. The backup piece of it has become critically important. Making sure that you have secure backups, that are backing up daily, that are offsite and offline, puts you in a situation in which you’re able to back up and resume working, without theoretically having to pay the ransom. We often see folks who don’t have their backups segregated properly, so that when the ransomware attack occurs, well, the bad actors are also in your backups. One more that I think is also important is something called endpoint detection and response, or EDR, which is managing those endpoints. It can be your phone or your laptop — anything that connects to the system. It makes sure that threats are detected through those endpoints, and it has a built-in response tool to neutralize those threats. Talk a little more about endpoints. It’s probably broader than just your phone. Jeff Olejnik: EDRs are the next generation of anti-

virus. They look at heuristic information to determine if a file operating on your computer is behaving like ransomware. The EDR identifies unusual activity and quickly and automatically isolates and contains that device, that workstation, or that endpoint, so that the problem doesn’t spread to other devices within your network. You still could have it, but at least it’s isolated to a single workstation or a single server. Given all this, how does an insurance company determine the size of a cyber policy and set the rate? Shalin Johnson: The coverage limit is based on an internal assessment of a client’s vulnerability around computers and technology, and what a worst-case scenario may look like if they were hacked. We have tools that help clients determine their true exposure, as well as provide benchmarking data. If they had any losses, they’re basically being underwritten. Do they have the security controls in place? Do they have multi-faceted authentication? If they don’t,

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respond? How would we interact with our insurance provider? How would we interact with our legal counsel? How do we work with the digital forensic team? What are we going to do from a messaging perspective? Who’s going to be making the call? These are ways to build up muscle memory. If you can get these incident-based drills in place, people will understand the decisions that need to be made in a period of crisis.

Kevin Pomeroy, EPS regional director – Mountain Central Region, USI Insurance Services

90% of the insurance marketplace won’t even look at them. Some carriers won’t renew a policy if the company doesn’t have MFA. The other big factor is these controls have to be in place. It used to be within the next 90 days. Today’s insurance companies want proof that those safety controls are in place before the policy even starts.

I expect they would deny coverage — and would likely be within their rights to do so. Obviously, we would advocate for our client, but I do think they would deny it, and to the extent that they paid anything initially when the claim occurred, they would seek to get reimbursed for that, from the insured.

So, let’s say I have MFA, and I passed the test. But I let it lapse, and I don’t educate my people. And then I get penetrated. What’s the insurance company about to say to me? Kevin Pomeroy: It’s a tough scenario. We would obviously advocate for our clients in those situations and say, “Hey, they had the controls at the time they needed them. There isn’t a requirement to maintain them throughout the entire policy period. That’s not expressly written into the contract, or expressly written into the application.” So, I think in that scenario, we would have a significant leg to stand on.

What kind of training should employers do proactively with employees to make sure they’re not doing stupid things? These expeditions can get pretty sophisticated. How do you train employees? Jeff Olejnik: First of all, it’s about building a culture of security awareness. It shouldn’t be just training once a year, or with new hires. It should be ongoing. Part of that process should include the CEO, the executive team. It’s about tone: “Hey, this stuff is really important. We need to protect our organization.” Then it’s training. You’re supporting it on an ongoing basis to test the quality of that online training, through regular phishing exercises. The first time a phishing exercise is done if training wasn’t involved results in about 30% of the people clicking through, and then hopefully, after training, nobody’s clicking on the phishing. It’s multi-faceted. Take a look at the latest vulnerability. How could it impact our organization? How would we

What if the company misrepresented what was actually in place? Saying they had an EDR and MFA but didn’t? Kevin Pomeroy: Great question. I think we’d be facing an uphill battle to get coverage. As they start to deploy the forensics and realize, “You guys don’t have what you said you did, based on the application, and that’s a warranty.” 34

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SPRING 2022

Shalin, as an insurance provider, do your clients ask for coaching? Shalin Johnson: It needs to start at the top so that you have the owner, the CEO, the C-level suite invested in this. There’s this belief that they’re smarter than the bad guys, because the social engineering has been around for a number of years. “Oh, we can tell,” they’ll say. Years ago it was an email saying, “Send a check to so and so.” And it was met with laughter. Now those emails are much more sophisticated. Two years ago, a client told me that the bad actors were in their system for several months, and they were reading emails. They were figuring

“We’ve heard about how people leave flash drives or thumb drives in public places in the hopes that somebody will pick it up and say, ‘This is interesting. I wonder what’s on it?’ They go home, plug it into their computer, and bada bing, bada boom.” out who’s in control of the checkbook, who’s what. They’re looking at the Outlook calendars. Sure enough, Bob, the president sends an email to Dan, the controller, saying, “I need you to do this, this and this. And, oh by the way, I need you to send a $50,000 down payment on that machine that we’ve been talking about.” He goes on by saying, “I hope you and the kids and your wife have a great time down at Orlando. Say hi to Mickey Mouse for me.” It becomes personal. It is the vernacular that they use between themselves. At 4 p.m.

that afternoon, Dan the controller calls me and says, “Just tell me we’ve got cyber insurance because we got hoodwinked.” I said, “Call your bank first. Make sure they know.” He was able to call the bank before they made the wire transfer that day. I think the big lesson is training. It used to be, “Oh, I can tell a bad email.” Not so anymore. Jeff Olejnik: Everybody in the organization should understand that any time you get an online request to send a wire transfer, buy gift cards, or change an employee’s direct deposit, [it] should be followed up with some other kind of communication. Call, walk down the hall or send a text message. Ask, “Bob, do you really want me to send this $50,000?” Kevin Pomeroy: Here’s something that’s a little bit outside the box, but it just shows how sophisticated these folks are getting. We’ve heard about people leaving flash drives or thumb drives in public places hoping that somebody will pick it up and say, “This is interesting. I wonder what’s on it?” They go home, plug it into their computer, and bada bing, bada boom. We’d think there’s no way that people could be so, forgive me, but stupid, right? But it does occur. We’ve seen those types of exact scenarios play out, and they’re costly. Jeff Olejnik: Whether it’s a jump drive, a mobile device, or even a personal laptop, you’ve got to have policies and technologies in place that say, “Here’s what the acceptable use is” and have the technology in place to enforce the policy. Any final words of advice, something we may not have covered here? Shalin Johnson: If you do business, you need to have a cyber policy. Cybercrime is not going away. Some cyber experts anticipate we will see over $10.5 trillion in damages by 2025. As a reference, that number would represent the third-largest economy in the world, behind China and the U.S. It’s going to be huge. Insurance companies can put together safeguards, as can all the very capable IT consultants. Everyone is going to be very busy because there’s always a new way to get in. That’s going to be the challenge.

Shalin Johnson, vice president – business insurance, Marsh & McLennan Agency

Kevin Pomeroy: We need to make sure everybody is properly protected and properly insured if things do occur — and to begin this process as early as humanly possible. Understand what is happening in the market and what controls are being emphasized by the insurance companies. Some of those controls take months and months to implement, particularly if it’s a little bit foreign to you. You may need to start working with different providers and putting a lot of effort into actually implementing everything. The other thing is to make sure you’re aware of what’s in your insurance policy. We all like to look at our policies, see a limit of $5 million and say, “Great, we have $5 million of coverage.” Cyber is different. There are a lot of different supplements within the policy and a lot of different insuring agreements. You may have a $5 million aggregate policy that provides $250,000 of ransomware coverage, with co-insurance alongside it. I say get ahead of it, make sure your controls are in place. Look at your policy with a fine-toothed comb because you don’t want to pay for something that’s not going to react when you need it most. Shalin Johnson: There’s still a learning curve in the manufacturing space. The manufacturing sector moved from being number eight in 2019 for cybercrimes to number two

in 2020, following only finance and insurance. The bad actors now see the middle market space as ripe for the taking. They have to tighten down the gates to get in. They can’t just allow any Joe Sixpack vendor to get into their service and order up stuff. A lot of manufacturers take pride in themselves on the ease of doing business. Today, a user-friendly business is a business that was also an open door to get in. Jeff Olejnik: You’ve got to be doing your due diligence on the vendors. I mean, if this is a vendor that is either critical to my business operation or that I’m sharing information with, I want to take a real close look at their insurance. I want to take a look at their hiring practices. I want to take a look at their cyber security controls. I want to understand their disaster recovery capabilities. Another thing is that security shouldn’t be considered a cost center. It’s an investment. We’re working with a lot of private equity firms and companies looking to sell that are starting to include cyber security controls as part of their due diligence process. They don’t want to acquire a company that exposes them to risk. We’re seeing a lot of companies looking at security and technology as a differentiator that adds value to their organizations. SPRING 2022 ENTERPRISE MINNESOTA /

Productivity

The Value of Engaged Employees M

How a culture of lean and continuous improvement helps companies improve productivity and increase quality. By Ally Johnston

any employers face the twin challenges of an unprecedented worker shortage and unrelenting customer demand for on-time, high-quality production. Fortunately, there is a successful strategy to address both issues at the same time: initiate, or ramp up, company-wide continuous improvement programs. To instill an environment for authentic, meaningful engagement with employees, managers must give them the skills and authority

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to recognize and initiate process improvement. Highly engaged employees contribute to a thriving company atmosphere. A Gallup survey recently reported that companies in the top 25% for high employee engagement perform much better in measures ranging from quality defects to profitability. When instituting process improvements, leaders who embrace manageable, daily process improvements in short time will see happier

employees as well as quality improvements and waste reduction. Notably, they don’t have to dedicate one staff person to the effort, or funnel substantial time and resources to a big one-time event.

Lean Thinking

A GREAT WORK ENVIRONMENT

It’s no surprise the worker shortage crisis has inspired manufacturing executives to focus on employee satisfaction. “Attracting and retaining a quality workforce” has never been a higher concern in the 13-year history of Enterprise Minnesota’s State of Manufacturing® survey of executives. Half of respondents say it is a challenge to doing business; half also report hiring new employees is the most important driver for future growth. The number of executives who now prioritize their work environment jumped from 39% to 69% from 2020 to 2021. These leaders realize a great work environment improves employee engagement, which is where lean and continuous improvement efforts can create such value.

Focus on the process

Add value to the customer

Engage all people

Eliminate Waste

FUELING EMPLOYEE ENGAGEMENT

For leaders just embarking on one or both efforts, it is important to provide a fundamental understanding of the goals and processes of lean and continuous improvement. Lean is essentially a dynamic way to produce more product using the fewest resources. Continuous improvement, on the other hand, means ongoing positive change to all phases of an operation. Continuous improvement done well is a constant effort that changes the way people work, the way people think, the processes

Ally Johnston helps manufacturers improve productivity, eliminate waste and build a culture of continuous improvement. Prior to joining Enterprise Minnesota, Ally served as industrial engineer, quality systems manager, and operations manager for Genesis Attachments in Superior, Wis. She earned a B.S. in industrial engineering from the University of Minnesota-Duluth.

they use, and the capability of an1operation. Lean companies always have continuous improvement, but companies need not be lean to practice continuous improvement. With lean and/or continuous improvement processes in place, employees are engaged at an authentic and high level. They are tasked to evaluate and improve the company’s processes daily. They are empowered to make bold suggestions and try new things. And — this is a crucial aspect of process improvement — they are allowed to try and fail, and try again, always working to improve outcomes. Engagement at this high level gives companies a profound competitive advantage. The Gallup Workplace Survey, which tracks engagement in more than 100,000 business units across the U.S., shows just 36% of employees say they are engaged in their work. Engaged employees report they are passionate about striving for company goals. They are more productive, willing to recommend their employer to others, and satisfied with their home and personal lives. In terms of measurable outcomes, companies in the top 25% of engaged employees report 64% fewer safety incidents and 41% quality defects, with 81% less absenteeism. These same companies report 14% greater productivity and 23% greater profitability than those that measure below them in engagement. All companies can see dramatic improvement in employee satisfaction by implementing or reinvigorating the process changes centered on lean and continuous improvement. After all, when employees feel they are contributing in a significant way to their employer’s success and ongoing improvement, they feel more connected to the company and motivated to initiate positive changes.

BEYOND CLOCK-IN, CLOCK-OUT

Consider a firm of about 50 employees that takes on steel fabrication projects for agriculture, construction and heavy equipment manufacturers. Morale and continuous improvement had stalled, and the company needed a boost. The company implemented Lean Daily Management, a system that enables the organization to track their success at achieving goals. Training in Lean Daily Management helps employees

SPRING 2022 ENTERPRISE MINNESOTA /

Eliminate Waste

Eliminate Waste: DOWNTIME

education, and opportunity to do so. It’s important to take a step back and ask, “Am I developing my employees? DEFECTS OVER-PRODUCTION WAITING NON-UTILIZED TALENT Am I giving them an Efforts caused by rework, scrap Making more than is needed or Wasted time. Underutilizing employees’ and incorrect information. before it is needed. talents, skills and knowledge. opportunity to suggest ideas? Am I empowering them? Am I letting them take initiative?” Successful companies focus on processes — not individuals or departments TRANSPORTATION INVENTORY MOTION EXTRA-PROCESSING Unnecessary movement of Excess information, product Unnecessary movement More work or higher quality level — and make sure they information, products and materials. and materials. involving people. than required by customer. are integrated throughout the company. From those identify process problems, take corrective processes, companies build systems that each production cycle. 1 action and check that past actions and can address risk, change and growth. Once the initial suggestion was made, improvements are being sustained. Systems improve constantly if everyone the team evaluated further and determined After a successful pilot program, shares a passion for evaluating processes it was overprocessing waste. They came to managers launched Lean Daily and then implementing improvements. learn that employees at a sister company Management throughout the organization. An 80-person manufacturing client immediately removed the part when they It impacted one employee profoundly. This of Enterprise Minnesota shows how received it, and then they welded in their own individual was a clock-in, clock-out kind empowering employees to recognize the part that matched the design of their swivel. of person, not engaged and he would even potential for process improvement can The company went from performing a avoid eye contact. When he started seeing yield enormous benefits. This company, frustrating, 15-minute job for a decade to changes and improvements to processes which manufactures a variety of aluminum removing that job from the entire process. that had frustrated him for years, he became products, including ice houses, trailers Absolutely, by engaging employees and a leader on the shop floor. It transformed and docks, brought in consultants from giving them tools to evaluate problems and his attitude. Not only did his engagement Enterprise Minnesota to train employees make changes, the results can be dramatic. improve but so did the engagement of the on Learn-to-See and DOWNTIME — two Think of the impact of saving 15 minutes team members around him. processes for identifying and minimizing or during each production cycle, compounded eliminating waste (see sidebar). over 10 years! MAKING GREAT COMPANIES The employees learned the eight wastes FOCUS ON PROCESS EVEN BETTER of DOWNTIME and then went out on the By employing process improvement Leaders of the most successful lean and floor to identify them. They learned daily initiatives, the steel fabrication company continuous improvement cultures recognize management principles and had to identify reaped the benefits of improved morale the two-way street needed for these a goal every single day and measure their and greater employee engagement. Those initiatives to take root and thrive. Managers progress toward the goal. Their continuous same initiatives — at the very same time — cannot expect employees to think of ideas improvement culture was really taking boost quality and reduce waste, a clear win and bring them to company leadership hold. for companies and their customers. if they are not given the knowledge, A production lead took the information Another example is a very successful company that produces hydraulic scrap shears and concrete pulverizers for the recycling and demolition industry. Once the company gave its employees the tools to evaluate processes, it became even better. In one particular process, the company spent about 15 to 20 minutes welding a stop piece for a rotation swivel. It was a frustrating task for the employee assigned to the process because the tight space in which he worked made it difficult to weld. After the employee was trained in lean thinking — specifically in identifying waste — he suggested the welding be done in another area, earlier in the process. Acting on his recommendation, the company moved the welding task to a cell earlier in the process, saving five to 10 minutes in

Manufacturers want to be known as having a great work environment. Manufacturers want to be known as having a great work environment

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advantage as they compete for both employees and customers. But leaders often say one of the biggest obstacles to implementing or enhancing Four approaches to lean and continuous their lean and continuous improvement have been particularly useful to improvement processes is time. company leaders. These skills can be taught and Many report that lean and implemented in a relatively short period of time and continuous improvement can be expanded throughout a company to bolster lose priority status when the engagement of all employees. things get busy. This might be because many leaders see Learning to See teaches employees to identify which time-consuming events or processes add value and which do not, which are necessary dedicated managers as essential and which are not. It’s remarkable how just being aware to these systematic process of categorizing specific processes in this manner opens improvements. Assigning employees’ eyes to the potential for process improvement and one manager to be the “Lean waste reduction. We can go to the shop floor or office where Person,” or having a few onethe work gets done and teach employees to see the wastes. time events without following Once they can see those wastes, we can use a systematic through to incorporate the skills process, called Plan Do Check Act, to eliminate them. learned into the workplace, DOWNTIME enhances Learning to See training by contradicts how lean and helping employees see waste even more narrowly and is an continuous improvement extremely useful next step in process improvement. The programs work the best. acronym DOWNTIME specifies the eight wastes a lean system Successful managers should root out: Defects, Over-Production, Waiting, Nonintegrate lean and continuous Utilized Talent, Transportation, Inventory, Motion and Extraimprovement initiatives into Processing. FAIL FAST, FAIL CHEAP, daily processes, with employees A Kaizen Event is a team workshop, conducted outside LEARN LOTS constantly asking how things of the manufacturing process, that focuses on a particular This same company is currently can be done better. These area that needs improvement. Kaizen is a Japanese term working to improve its process improvements are not that means change for the better. In a typical Kaizen event, efficiency in aluminum trailer add-on tasks, but ever-present employees come together to address a specific problem. In production. Every day the aspects of company culture. this setting, employees can learn and practice Plan Do Check team has a goal of trailers built, Companies can successfully Act, which they can then apply to other processes when the and they are tracking daily to begin lean or continuous event is finished. measure their progress. While improvement with short training Value Stream Mapping is something a lot of companies evaluating their productivity, sessions, provided there is desperately need. The root of this process involves mapping they’ve discovered they spend follow up to ensure employees out information or material — or both — process steps to an excessive amount of time implement their skills on a daily see where waste or inconsistencies exist. Employees will do setting up to produce each basis. current-state mapping, with a list of ideas for improvement. trailer. Specifically, when beginning Then they develop a future-state map that shows significant They have not yet found a or ramping up a lean or improvement in lead time, process time and alignment of roles solution to this challenge, but continuous improvement and responsibilities. After that, they work on a strategy or road instead of jumping at the first program, leaders should have map with actionable tasks to move the company from the idea — one that would be costly their employees ask three current-state map to the future-state map. and might not help that much questions: What should I be given their space constraints doing? How should I be doing — they are now considering it? Why should I be doing it? other possible solutions. Their The answers should all feed into engaged employees are rising to the company is truly embracing the culture the same overall question: Does it support challenge. One proposal suggests creating of continuous improvement by teaching the customer? a fire-drill type fixture team that would be employees how to see waste, empowering Above all, the keys to successful lean tasked with rapid set-up for production. them to find solutions, and giving them the and continuous improvement programs In situations like this, where a team sees opportunity to try those solutions. are engaging all employees and focusing several potential solutions, it’s best to fail on process. This combination leads to MAKING LEAN AND fast, fail cheap and learn lots. In other deeper employee engagement, added CONTINUOUS IMPROVEMENT words, it often makes the most sense to try value for customers and waste reduction WORK FOR YOUR COMPANY options that don’t involve big expenditures — creating a clear competitive advantage Companies that embrace continuous or lengthy implementation periods. for companies that embrace a culture of improvement and lean initiatives hold an Regardless of what changes they try, this continuous improvement. from these sessions and sat down with the scheduling lead to address a wasteful system that had been in place for years. Translating sales orders into a production schedule generated a mountain of paperwork and expended unquantifiable time — all just to get production started. These two worked together using the principles they had learned to identify and eliminate waste. They trimmed the complex weekly scheduling document from 14 pages to a one-page instruction sheet. It made assigning floor tasks more straightforward for everyone on the team, reducing hours spent preparing and deciphering the complex instructions. The new process also meant the production lead could feel more comfortable taking vacation, knowing others could manage the process in his absence.

Four ways to launch process improvement

SPRING 2022 ENTERPRISE MINNESOTA /

Final Word

Win-Win Opportunities Manufacturers might be wise to consider adding hard-working Afghan evacuees to their workforces.

he events in Afghanistan last August created a chain reaction of tragedy, a host of still unfolding challenges and, now, an opportunity for Minnesota’s manufacturers to exhibit patriotic loyalty while shoring up their depleted workforce. The planned exit of our troops from that Middle Eastern country turned chaotic in the final days and created significant danger for those who had helped our servicemen and servicewomen. Thousands were evacuated, with the help and drive of our troops, who felt strongly about providing protection for those who had assisted America. Not all those who helped our American troops escaped at that time, and the outlook for those left behind appears bleak. Some hopeful news, however, is that as of mid-February, 300 Afghan families have safely relocated to Minnesota. Churches and other organizations are pitching in to assist these friends of America as they begin healing from their trauma, help them find housing and schooling for their children, and guide them to a self-sustaining lifestyle. Five Minnesota agencies are helping these evacuees get settled. They are working with individual churches or other organizations who “adopt” one family each. Federal agencies are working to empty out the military compounds that first accepted the Afghans when they arrived in the United States. And now, Enterprise Minnesota is hearing from government entities about various efforts to promote worker placement for these evacuees. The refugees’ legal status requires them to be self-sustaining within six months of being placed in housing. Several people have mentioned how grateful these Afghans are to be in Minnesota and how highly motivated they are to find sustainable work. As all are coming to terms with the fact that our labor shortage isn’t going away for many years, there are Afghans who want to work and find

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Lynn Shelton is vice president of marketing and organizational development.

meaningful careers. The Afghans’ arrival gives us all an opportunity to transform the surreal dismay that we witnessed over several shocking days on our televisions and other digital media into an opportunity to satisfy

real-world altruism with manufacturing interests. The opportunity brings the potential for new and motivated workers. If you have interest in helping the effort to find employment for these Afghan friends — possibly at your company — I suggest you first inquire “close to home,” as there may be a veteran or church volunteer who is aware of a family searching for work. The male adults have received their federal employment authorization and Social Security numbers. Many come with skills and education. The older female adults may never have learned to read, and therefore their challenges are greater for employment. All family members have gone through health screenings and received vaccines (including COVID) while still on military compounds where they also began English clases. We can all demonstrate our patriotic loyalty to our troops and to those who help them by assisting in the settlement of these families. Companies that hire from these ranks will benefit from adding motivated, grateful workers and likely please other manufacturing employees who also have wanted to help. For more information, contact: Anisa Hajimumin [anisa.hajimumin@state. mn.us] and Danielle Nelson [danielle. nelson@mnchurches.org].

Afghan Evacuees • • • • • •

65,657 have already been moved from the bases to other locations 8,184 remain on bases 300 families (976 people) have arrived in Minnesota since the end of September 1,400 people were projected to arrive by mid-February Half are under 18 years old The impressively diverse number of groups are working together to serve these families include HHS, DHS, DEED, Afghan Cultural Society, Salvation Army, Lutheran Social Services, Episcopal Migration Ministries and MN Council of Churches. All are working toward housing, job acquisition, health services, legal help, children’s education, ESL, and so much more.

Enterprise Minnesota consultants help manufacturers grow profitably. Our strategy & revenue growth experts can help you define your company’s path to profitable growth.

Steve Haarstad

Business Growth Consultant

Penny Hanson

Business Growth Consultant

For over 30 years, our consultants have been helping Minnesota’s small and mid-size manufacturers achieve sustainable profits and growth. Contact us today to get started.

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